General Motors (GM) has overtaken Volkswagen as the No 1 foreign automaker in the world's third biggest vehicle market.

GM and its Chinese joint ventures sold 308,722 vehicles in China from January to June this year, an increase of 18.9 per cent from a year ago, the Detroit-based auto maker said yesterday in a statement.

Meanwhile, Volkswagen, which began producing cars in China more than a decade earlier than GM, sold 262,198 vehicles here during the same period.

But the German group claims it is the sole automaker in China reporting retail sales, instead of sales made to dealers.

GM said that its robust sales drove its market share in China to 10.9 per cent in the first half of this year, up from 9.4 per cent at the end of last year.

"With the rollout of additional products in the second half and the ongoing popularity of our existing line up, we anticipate double-digit sales growth and another record year for GM in 2005," said Kevin Wale, president and managing director of the GM China Group.

The company launched a slew of all-new and upgraded models in China in the first half of this year, such as the Chevrolet Sail compact car, Chevrolet Epica sedan and Cadillac SRX sport utility vehicle.

Officials said earlier that the firm plans to introduce a record number of new vehicles this year in China, including more than 10 all-new or upgraded vehicles.

Shanghai GM, GM's flagship joint venture with Shanghai Automotive Industry Corp (SAIC), sold 135,381 Buick, Chevrolet and Cadillac vehicles in the first six months of the year.

Sales of SAIC-GM-Wuling, GM's mini-vehicle joint venture with SAIC and Wuling Automotive in South China's Guangxi Zhuang Autonomous Region, surged by 48.7 per cent year-on-year to 172,368 units in the period.

"GM is in a good position (in China) as it is able to source a lot of cheap quality parts from South Korea. This is where its strength is coming from," Benjamin Asher, an analyst from industry consultancy Automotive Resources Asia Limited, told China Daily in telephone interview yesterday from Bangkok.

A few GM products being made in China, such as Buick Excelle, and Chevrolet Epica and Spark, are based on models designed by its South Korean affiliate - GM Daewoo Automotive & Technology Co Ltd.

GM will introduce the Chevrolet Aveo compact car, also designed by GM Daewoo, later this year or next year in China.

China was GM's most profitable market around the world in both 2004 and 2003. However, the company has experienced profit plunges in China this year due to price cuts, rising costs and slower sales growth when compared with last year.

Combined profits of GM's Chinese joint ventures dropped to US$33 million in the first quarter of this year from US$162 million from the same period of last year.

GM's sales grew by 27.2 per cent to more than 492,000 vehicles last year from 2003.

Jia Xinguang from China Automotive Industry Consulting and Development Corp said: "GM also faces mounting challenges from Japanese and South Korean rivals, such as Honda and Hyundai, whose sales are growing strongly in China with their popular small-and-mid-range models."

However, GM is still aggressively expanding production capacity in China because the nation is "the most dynamic and best place in the auto world today," the company's Asia-Pacific President Troy Clarke said earlier this year.

GM now has an annual manufacturing capacity of 850,000 vehicles in China.

As part of its US$3 billion investment plan in China jointly with SAIC, GM will double its annual capacity to 1.3 million units by 2007 from 2003.

"Although we don't expect the industry to return to the unusually high growth of 2002 and 2003, we do foresee a healthy and sustainable growth level of between 10 and 15 per cent this year," Wale said.

(China Daily July 7, 2005)